Landcorp Farming doubles profit

Landcorp Farming has recorded a
net operating profit of $30 million for the year ended 30
June 2014, up from $13 million from the previous year.
Total revenue from operating activities increased 37% to
$241.7 million.

The growth in revenue reflected a recovery
in prices as favourable weather boosted production volumes
for Dairy, Sheep and Beef products. Landcorp’s expansion
of dairy production across the country combined with record
milk solid prices contributed to the strong
performance.

Landcorp CEO, Steven Carden, said various
business decisions taken in 2013/14 meant Landcorp could
approach the coming year with confidence, despite the
prospect of lower prices.

“We’re very focussed on
initiatives to raise productivity and efficiency across our
operations.

“We have strengthened our productive
capacity and secured economies of scale through new
partnerships with landowners like the Hauraki Collective,
introducing a state of the art Farm Management software
system, and a company-wide initiative to reduce costs and
streamline decision-making at the farm
level”.

“We’ve also made solid gains in feed
production per hectare and have achieved a 10% lift in dairy
production” he said.

Landcorp’s total shareholder
return (or comprehensive income) was $115.9 million compared
with a $1.5 million loss the previous year. The increase
was mainly due to a $36.7 million unrealised gain in the
market value of livestock and a $67.6 million revaluation
gain on land and improvements.

High dairy prices and
success with partnerships for expanded production increased
milk revenue by 70% to $129 million.

Expenses for 2013/14
increased 15% to $207 million due to the commencement of the
sharemilking arrangement with the Shanghai Pengxin Group and
expansion of the Wairakei Pastoral Dairy conversion program.
Purchased feed also increased as Landcorp increased
production to exploit high forecast milk prices and to
offset the effect of the dry conditions experienced in the
North Island in early autumn

Mr Carden said, despite the
bottom-line impact of the projected fall in milk prices for
2014/15, Landcorp was well placed to continue to record
sustainable profit growth over the medium term.

“In
addition to our productivity improvements, we have a
strategy focused on significantly improving our
environmental footprint and driving a big lift in the
calibre of our people and their safety on-farm.

“In the
medium and long term, we will be taking significant steps to
reduce our exposure to commodity price cycles. In part,
that means maintaining a diverse portfolio of species farmed
- including a renewed emphasis on expanding our red meat
production in our lamb, beef and venison categories. This
will involve collaborating with other farming groups, such
as iwi, interested in joining our contracts or establishing
new ones with us.

“We also plan to ensure our products
are targeted at niche markets where we can have a direct
relationship with the customer,” he said.

Landcorp will
pay the shareholder an increased dividend of $7 million for
2013/14. Debt has been reduced by $56 million to $172
million over the course of the year, following the sale of
various farms in the North Island.

About Landcorp FarmingLandcorp is a
state owned enterprise and New Zealand’s largest corporate
farmer. It owns or manages 137 dairy, beef, sheep and deer
farms from the Far North to Southland. With 1.6 million
stock units on 376,942 Ha, it produces around 18,000 tonnes
of milk solids, 10,000 tonnes of sheep meat, 10,000 tonnes
of beef, 3,500 tonnes of wool, 2,500 tonnes of venison and 8
tonnes of velvet per annum.

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